Health Plans

How value-based care can support the growing mental and behavioral health need

By Lea Ventura, and Peter Manoogian

May 23, 2021 | Article | 6-minute read

How value-based care can support the growing mental and behavioral health need

Health plans in the United States are increasingly shifting away from traditional fee-for-service (FFS) reimbursement toward value-based care (VBC) models, which incent the quality of care as opposed to quantity. Although the promise of high-quality, cost-effective care is alluring, the adoption of and engagement in these programs has proven challenging for both plans and providers alike. Barriers include a lack of resources to support VBC programs, technology interoperability challenges, continuously evolving policies and regulations, unpredictable revenue streams and difficulty collecting and reporting data. Nonetheless, about half of reimbursements in the commercial sector are VBC reimbursements.


In contrast to physical health, mental and behavioral health are in a nascent stage of VBC adoption. Given that general healthcare spending is two to three times greater for patients with a mental or behavioral health diagnosis than for those without, care delivery models emphasizing efficacy and savings are particularly appealing.


There are compelling reasons for health plans to innovate in this area, despite the general complexities of VBC and barriers specific to mental and behavioral health.

The pandemic is driving demand for mental and behavioral health services

The COVID-19 pandemic has resulted in a wave of new or exacerbated mental health symptoms, including a four-fold increase in depression, a rise in serious consideration of suicide and a worsening of drug-related mortalities. At the same time, this increased prevalence of mental health conditions has fostered an awareness of problems and generated an appetite for treatment unlike ever seen before. Investors are pouring money into digital behavioral health solutions, mental health providers are seeing an influx of patient referrals and (based on a ZS analysis of third-party claims) health plans are experiencing significant and sustained increases in claims volume for psychotherapy-related services.


Although the pandemic has intensified and increased the visibility of mental and behavioral health problems and the strain they place on our healthcare system, this burden far predates COVID-19. According to an OPEN MINDS report, mental health spending was more than $225B in 2019; untreated mental illness costs the U.S. as much as $300B annually. Recent events offer a timely opportunity for health plans to both correct a longstanding fiscal plight and prepare for the psychological effects that will likely outlast the pandemic itself. 

The increased utilization of mental and behavioral healthcare services is likely to endure

The symptoms of pandemic-related trauma may eventually subside in a post-COVID-19 world, but there is still likely to be a sustained increase in service utilization due to increased recognition of mental health issues, awareness of treatment options, ease of care access via telehealth and reduced stigma. An enduring surge in service consumption may push our mental and behavioral healthcare system even closer to the brink of collapse, resulting in a secondary public health crisis in which high premiums, deductibles, co-pays and out-of-pocket expenses become an insurmountable barrier to receiving care. While we have developed an effective COVID-19 vaccine, we have yet to identify a strategy for inoculating our society against the invisible malady that is the overburdened behavioral healthcare system itself. 

Value-based care is a necessary first step toward unburdening our mental and behavioral healthcare system

Although VBC is not an all-encompassing solution, it is a meaningful place to start. Both the Centers for Medicare & Medicaid Services and commercial payers have begun to dabble in mental and behavioral health VBC programming. The initial results demonstrate improved psychological outcomes, millions of dollars in cost savings and reduced utilization of expensive medical care for comorbid physical conditions.


Expansion of similar programs to more providers is an obvious next step, but numerous barriers obstruct this path forward:

  • Provider reimbursement is not currently aligned with mental and behavioral health outcomes
  • The field has not agreed on meaningful metrics with which to measure provider performance
  • Providers lack the technical infrastructure to support VBC program implementation
  • Mental and behavioral health continues to exist in one silo while physical health exists in another, preventing treatment of the whole person and related benefits from being realized

Health plans and providers will need to work together to remove these obstacles. They must take advantage of the opportunity to act now. But payers also are in a unique position to advocate for VBC programs, bridge gaps across stakeholders and capture the value associated with integrated care.

Three key steps health plans can take to support mental and behavioral health providers on their value-based care journey

Health plans looking to advance VBC in the mental and behavioral health space should work with providers to ensure that they have what they need to meet this challenge. Here are a few key steps they can take:

  1. Align on metrics that matter. Plans should initiate payment contracts that align provider reimbursement to mental and behavioral health outcomes—but not just any outcomes. A plethora of metrics exist, yet there is limited understanding of which are considered gold standards by mental and behavioral health experts. Furthermore, performance measurement is often oversimplified. As explained by the chief medical officer of a regional health plan, “Most programs focus on driving down utilization, but the more sophisticated argument is that increased utilization now will decrease long-term cost, which requires a multiyear measurement window.” Plans should work toward meaningful outcome metrics as opposed to process metrics.
  2. Leverage social determinants of health (SDOH) dataResearch suggests that environmental and economic factors account for up to 80% of health outcomes. As health plans continue to collect more information on SDOH, they should use this data alongside historical care utilization patterns to predict future mental and behavioral health needs. A bird’s-eye view of future needs would allow health plans to deploy proactive interventions that prevent condition exacerbation and decrease long-term costs.
  3. Consider partners focused on value-based delivery. Not all provider organizations are ready to dive head-first into VBC arrangements. Health plans should identify those organizations that are willing and able from a cultural, financial and infrastructure perspective. Certain potential partners are already incorporating value-based models into mental healthcare (for instance, Ginger) and will become early adopters, while others will require a more gradual on-ramp to VBC programming. A systematic method for assessing provider readiness would help health plans allocate their resources to the partnerships that are likely to have the greatest impact.

The COVID-19 pandemic has brought mental and behavioral health challenges to the forefront of stakeholders’ minds and we should work diligently to keep them there. Failure to use this newfound energy as a springboard for VBC innovation will result in a missed opportunity to address long-standing, momentous problems. Investments in the mental and behavioral health system will be crucial, but we must ensure our efforts are directed at value-based solutions as opposed to perpetuating the current patchwork approach within the FFS model. Our work, however, does not end with VBC. There is much to be done in addressing related issues including, but not limited to, the lack of mental health parity and the disproportionate impact on underserved populations. As such, we should view VBC not as an endpoint, but rather the first of many disruptive innovations that will transform mental and behavioral health.

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